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iTunes FairPlay DRM - Protecting artists and labels, or helping Apple sell more iPods?

One day, two emails, two very different viewpoints:Email #1: "DRM on songs sold through iTunes is a necessary evil, there to protect artists and the labels from piracy."Email #2: "Apple's FairPlay DRM is nothing more than a tool that locks you into buying iPods forever. I know, I've bought my daughter three over the years!"

One day, two emails, two very different viewpoints:

Email #1: "DRM on songs sold through iTunes is a necessary evil, there to protect artists and the labels from piracy."

Email #2: "Apple's FairPlay DRM is nothing more than a tool that locks you into buying iPods forever. I know, I've bought my daughter three over the years!"

My take on this situation is that DRM played an important part in Apple's success in creating a sales momentum behind the iPod. Sure, iTunes isn't a total music black hole, but if you have more than a few dozen tracks locked up in it, and if those tracks are shackled by FairPlay, freeing the music is a major pain at best.

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Then there's the cash side of things. Many claim that iTunes is a loss leader for Apple, but I have a hard time believing that Apple makes a loss on it. While I think that the back of the envelope calculations that Billboard carried out were flawed - during 2007 Apple cashed in a 30 percent profit margin on $1.9 billion in revenue - it's still hard to believe that Apple is making a loss (because if nothing else, that would make Apple sensitive to small cost of sale increases).

But my dislike of Apple's DRM (and iTunes in general) doesn't stop it being widely successful. iTunes is the number one music retailer in the US, more than 4 billion songs sold, over 50 million customers and a catalog of some 6 million songs. On top of that, in many countries iTunes is about the only place users can find legal music to download. In the US though there's no shortage of very good alternatives to iTunes.

Now what was it that P. T. Barnum said about suckers ... ?

Thoughts?

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